Travelers Ins. Co. v. S & H Tire Co.

• Decision Date: 12 July 1984
• Docket Number: Docket No. 65049
• Citation: 351 N.W.2d 279,134 Mich.App. 214
• Parties: TRAVELERS INSURANCE COMPANY, subrogee of Robert Dilts, Plaintiff-Appellant, v. S & H TIRE COMPANY, Defendant-Appellee. 134 Mich.App. 214, 351 N.W.2d 279
• Court: Court of Appeal of Michigan — District of US

Page 279

351 N.W.2d 279

TRAVELERS INSURANCE COMPANY, subrogee of Robert Dilts Plaintiff-Appellant, v. S & H TIRE COMPANY, Defendant-Appellee.

Docket No. 65049.

134 Mich.App. 214, 351 N.W.2d 279

Court of Appeals of Michigan.

Submitted June 7, 1983.

Decided April 30, 1984.

Released for Publication July 12, 1984.

[134 MICHAPP 218] Lacey & Jones by Stephen Jay Schwartz, Detroit, for plaintiff-appellant.

Davidson, Breen & Doud, P.C. by John Davidson, Saginaw, for defendant-appellee.

Before DANHOF, C.J., and ALLEN and HANSEN, ^* JJ.

ALLEN, Judge.

In this appeal, we are asked to decide a question of first impression: at what time does the three year statute of limitations commence to run on an action brought under M.C.L. Sec. 418.827; M.S.A. Sec. 17.237(827) by a workers' compensation carrier for recovery and reimbursement from a third-party tortfeasor of workers' compensation benefits previously paid by the insurer to an injured employee. On May 20, 1982, the trial court held that the period of limitation commenced to run on the date of the industrial injury to the employee and thereafter entered an order granting defendant's motion for an accelerated judgment. Plaintiff, Travelers Insurance Company, appeals as of right contending that the period of limitation does not begin to run on suits brought under M.C.L. Sec. 418.827; M.S.A. Sec. 17.237(827) until the third-party tortfeasor [134 MICHAPP 219] pays the injured employee without withholding from the settlement agreement sums which the carrier previously paid in workers' compensation benefits. We agree with plaintiff and reverse.

On June 14, 1977, Robert Dilts, an employee of plaintiff's insured, Firestone Tire & Rubber Company, was injured during the course of his employment when he fell while alighting from his employer's truck onto premises owned by S & H Tire Company (S & H). As the workers' compensation carrier for Firestone, Travelers paid Dilts $37,147.60 in weekly disability benefits pursuant to the provisions of the Michigan Worker's Disability Compensation Act. On July 11, 1978, Robert Dilts commenced an action against the third-party tortfeasor, S & H. Dilts alleged that S & H's negligent maintenance and supervision of its parking lot caused him to sustain injuries which resulted in serious impairment of his bodily functions and permanent serious disfigurement. On January 12, 1979, Travelers filed a notice of its lien against any payment made pursuant to any settlement or judgment. On May 11, 1979, Travelers filed a motion to intervene as a party to the suit between Dilts and S & H. Following a March 19, 1980, hearing, the trial court issued a written opinion denying Travelers' motion to intervene.

On July 10, 1980, Travelers filed a motion to stay proceedings in the suit between Dilts and S & H until the Court of Appeals rendered a final determination of Travelers' right to intervene. The motion was granted by the trial court on July 30, 1980. In an unpublished per curiam opinion, the Court of Appeals affirmed the trial court's denial of Travelers' motion to intervene. The Court noted that Travelers failed to argue below that it was entitled to recover for excess economic losses for which tort liability was not barred. The Court stated that Travelers might be entitled to intervene for recovery of excess economic losses for [134 MICHAPP 220] which tort recovery was not barred if it amended its complaint to claim economic damages.

On rehearing, the Court of Appeals revised its decision in an unpublished per curiam opinion. Dilts v. S & H Tire Co., Docket No. 52627, decided July 1, 1981. Noting the Supreme Court's decision in Great American Ins. Co. v. Queen, 410 Mich. 73, 300 N.W.2d 895 (1980), this Court affirmed the lower court's decision without prejudice to Travelers' right to intervene for reimbursement of benefits representing excess economic loss.

On April 29, 1981, the date the original Court of Appeals decision was rendered, Dilts's action against S & H was dismissed by the trial court, the parties having reached an amicable settlement. Plaintiff filed the instant suit against S & H on September 21, 1981. Plaintiff's complaint alleged that although the revised Court of Appeals decision held that Travelers was entitled to reimbursement for workers' compensation benefits previously paid which did not serve as a substitute for no-fault insurance benefits and that plaintiff was entitled to raise the issue at trial, plaintiff could not raise a new motion to intervene since the action had previously been dismissed by stipulation of the parties pursuant to a settlement. Plaintiff alleged that it was entitled to a minimum of $17,000 from S & H as reimbursement for workers' compensation benefits paid to Dilts which did not serve as a substitute for no-fault insurance benefits.

M.C.L. Sec. 418.827; M.S.A. Sec. 17.237(827) provides in pertinent part:

"(1) Where the injury for which compensation is [134 MICHAPP 221] payable under this act was caused under circumstances creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefits or the taking of proceedings to enforce compensation payments shall not act as an election of remedies but the injured employee or his dependents or personal representative may also proceed to enforce the liability of the third party for damages in accordance with the provisions of this section. If the injured employee or his dependents or personal representative does not commence the action within 1 year after the occurrence of the personal injury, then the employer or carrier, within the period of time for the commencement of actions prescribed by statute, may enforce the liability of such other person in the name of that person. Not less than 30 days before the commencement of action by any party under this section, the parties shall notify, by certified mail at their last known address, the bureau, the injured employee, or in the event of his death, his known dependents or personal representative or his known next of kin, his employer and the carrier. Any party in interest shall have a right to join in the action.

"(2) Prior to the entry of judgment, either the employer or carrier or the employee or his personal representative may settle their claims as their interest shall appear and may execute releases therefor.

"(3) Settlement and release by the employee is not a bar to action by the employer or carrier to proceed against the third party for any interest or claim it might have.

* * *

"(5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith [134 MICHAPP 222] be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits." (Emphasis added.)

On appeal plaintiff contends that in situations where, as here, the injured employee files a third-party suit, the workers' compensation carrier may assert its right to reimbursement in three ways: First, by filing its own action, as subrogee of the injured employee, against the third-party tortfeasor, as expressly authorized in subsections (1) and (3); Second, by filing a motion to intervene in the injured employee's suit against the third-party tortfeasor as expressly authorized by the last line of subsection (1); and, Third, by a judicially-created cause of action established by this Court in Ohio Farmer's Ins. Co. v. Neff, 112 Mich.App. 53, 315 N.W.2d 553 (1981). Plaintiff contends that under all three potential remedies, plaintiff is not barred by the running of the statute of limitations. We discuss the merits of plaintiff's claims in inverse order.

Plaintiff suggests that the cause of action recognized by the Court in Ohio Farmer's was in the nature of an equitable action for conversion on which the period of limitation admittedly begins to run when the conversion (failure to reimburse the carrier) takes place. Plaintiff construes the opinion far too broadly. Our Court did not clearly identify the nature of the cause of action which it recognized when it allowed the insurer to sue the employee and the third-party tortfeasor in Ohio Farmer's. Thus, it is not known whether the Court viewed the suit as a subsection (1) action which authorizes an insurer to bring an action in the name of the injured employee if the employee, his dependents or personal representative do not commence[134 MICHAPP 223] the action within one year after the occurrence of the personal injury. The opinion makes no reference to the amount of time which lapsed between the injury and the commencement of the employee's suit. The opinion also made no mention of subsection (3) which states that a settlement and release by the employee is not a bar to an action by the carrier to proceed against the third-party tortfeasor for any interest or claim it may have. Furthermore, the Court never acknowledged that equitable principles were the crux of its decision and the Court did not label the cause of action as an action for conversion.

Because the Court's opinion in Ohio Farmer's fails to identify the nature of the cause of action which it found the insurer was entitled to pursue and because no statute of limitations question was raised in that case, Ohio Farmer's is of limited value in deciding the question raised by the instant appeal. Certainly, it fails to create a new or additional form of action under which plaintiff carrier...